MSE News: Tesco Bank credit card-holders stung with unexpected charges after...

PeacefulWaters

Abbey1991 wrote: »

Not really sure. But if an accountant found the calculation confusing, it probably would be impenetrable for anyone else.

Accountants don't have to have any qualifications.

GingerBob_3

PeacefulWaters wrote: »

Accountants don't have to have any qualifications.

Real ones do.

Teach[Tesco] bank cardholders pay interest due to not reading their T&Cs

If Tesco had issued their T&Cs in an Amazon tribal language, a significant number of posters on here would still have come up with this hogwash. T&Cs are often impenetrable - on purpose! I haven't looked into this particular issue, but my money is on this being one such instance.

Mr_Goodkat

GingerBob wrote: »

Real ones do.





If Tesco had issued their T&Cs in an Amazon tribal language, a significant number of posters on here would still have come up with this hogwash. T&Cs are often impenetrable - on purpose! I haven't looked into this particular issue, but my money is on this being one such instance.

It is a basic fundamental of credit card usage that the not charging interests on transactions from the date of purchase is only applicable if the statement balance is cleared in full and generally needs to be done two months in a row to prevent trailing interest unless a promotional rate applies to ALL transactions that are on the account.

In this case Tesco offered 0% on Tesco shopping for a period of time they did not at any point remove the need to clear the statement balance in full to prevent interest accruing on non Tesco transactions from the transaction date.

This is just the same as balance transferring then using the card for spending your balance transfer will stay at 0% but your spending will accrue interest from the date of the transaction (in most cases although Nationwide have changed this for their cards) as you only get the up to circa 56 days interest free on condition that you settle the statement balance in full by the due date.

Tesco did not spell the above out but anyone who understands the fundamentals of credit cards would know this. They will no doubt refund charges for people who complain as a gesture of goodwill but it is the card holder not Tesco who are in the wrong here!

GingerBob_3

Yes, that's all very well for credit card train spotters, but the majority of people aren't such enthusiasts. This issue, regardless of the detail, has resulted in - apparently - a significant number of card holders being affected. That in itself points to a problem with the way Tesco have implemented the offer. It's like Very and their "BNPL but delivery isn't included" trap; all detailed in the T&Cs (in gobbledegook) but not explicitly enough.

redux

GingerBob wrote: »

Real ones do.





If Tesco had issued their T&Cs in an Amazon tribal language, a significant number of posters on here would still have come up with this hogwash. T&Cs are often impenetrable - on purpose! I haven't looked into this particular issue, but my money is on this being one such instance.

You haven't looked?

It is very odd that you are offering to give your money away on terms you aren't even aware of. How do you intend to transfer it to anyone who takes you up on your offer to bet?

As for the Tesco offer, it is abundantly clear that it applies to spending with Tesco, excluding a few listed categories.

We’re giving our Credit Card customers a little extra help this Christmas

Use your Tesco Credit Card in store and at Tesco.com between 1st and 31st December 2016 and we’ll give you 0% interest on those purchases until your March 2017 statement. Terms, conditions and exclusions apply

And lower on the page the exclusions: some accounts with already existing other introductory offers, some departments such as opticians, mobile, photo labs, travel money, etc

Nothing even slightly hints that any spending outside Tesco will be interest free.

Anyone prone to imagining or hair-splitting tiny ambiguities would have some difficulty asserting that anything in the description or the terms or any omissions from them imply that purchases outside the offer period or offer territory are or should be included in the offer.

GingerBob_3

I looked:

The letter added: "This applies to your Tesco credit card spend in Tesco stores and at Tesco.com between 1 November and 31 December 2016. Remember you don't have to do anything to activate this offer as it is already available on your account."
As a result, some Tesco Bank credit card customers paid off their full balance minus the cost of items they'd bought at Tesco. However, when their next statement came through, they found they'd been charged interest on the transactions they HADN'T made at Tesco – even though they thought they had paid these off.
Tesco says it's charging customers who haven't paid off their card in full interest on the "average daily balance" of their account in line with its terms and conditions – and this means that card-holders are charged interest on purchases not made at Tesco, even though they've paid that amount off. It insists its marketing "accurately described" the 0% offer.

It's nowhere near as clear-cut as you imply. Start talking about 'average daily balance' and you're well on the way to classic obfuscation.


Do I win?

Paul_01

The ambiguity isn't around people expecting non Tesco spending to be at 0%.

The customers that have been caught out are the ones that tend to clear all spending each month.

So a customer wants to take advantage of the offer and buys a TV for £500 from Tesco. When the statement arrives they clear all non Tesco spending, just leaving £500 outstanding, expecting that not to attract any interest till March.

Most credit cards (certainly all the ones I have) apportion payments to the parts of a balance attracting the highest interest, it is therefore understandable that some people thought this would apply in these circumstances.

I don't think Tesco were pulling a deliberate fast one, they just could have explained it much better.

redux

GingerBob wrote: »

Start talking about 'average daily balance' and you're well on the way to classic obfuscation.

Just about all interest, on either savings or loans, is proportional to both amount and time.

But yes, even then we occasionally see a few people with monthly savings accounts wondering why they only get half the interest they assumed, and not understanding that not all of their money has been there all the time, so an average is involved.

Likewise for borrowing. Someone who borrows £1000 for 10 days will pay less interest than someone who borrows £500 for a month at the same rate.

If a customer does not understand this, it is not due to deceit or obfuscation by the bank.

molerat

Paul_01 wrote: »

The ambiguity isn't around people expecting non Tesco spending to be at 0%.

The customers that have been caught out are the ones that tend to clear all spending each month.

So a customer wants to take advantage of the offer and buys a TV for £500 from Tesco. When the statement arrives they clear all non Tesco spending, just leaving £500 outstanding, expecting that not to attract any interest till March. and that is what happened.

Most credit cards (certainly all the ones I have) apportion payments to the parts of a balance attracting the highest interest, it is therefore understandable that some people thought this would apply in these circumstances. and that is what happened.

I don't think Tesco were pulling a deliberate fast one, they just could have explained it much better.I think Tesco knew exactly what would happen. All CC providers are the same, they know the unwary will be caught out by it.

The problem was that the card balance was not cleared in full which means the non Tesco purchases attracted interest from purchase date.

Mr_Goodkat

Paul_01 wrote: »

The ambiguity isn't around people expecting non Tesco spending to be at 0%.

The customers that have been caught out are the ones that tend to clear all spending each month.

So a customer wants to take advantage of the offer and buys a TV for £500 from Tesco. When the statement arrives they clear all non Tesco spending, just leaving £500 outstanding, expecting that not to attract any interest till March.

Most credit cards (certainly all the ones I have) apportion payments to the parts of a balance attracting the highest interest, it is therefore understandable that some people thought this would apply in these circumstances.

I don't think Tesco were pulling a deliberate fast one, they just could have explained it much better.

Most credit cards however only give a grace period on purchases if the monthly statement balance is repaid in full by the due date or the entire balance is covered by a promotional deal.

In this case only the Tesco spending was covered by the promotional deal so these purchases are 0% however they did not make any change to the requirement to clear the statement balance in full for them to waive the interest on other purchases.

The general advice (unless using a card with multiple simultaneous promotional offers or using a Nationwide card) is never use a credit card for anything other than that specific offer.

Tesco Card holders should have used the Tesco card only for Tesco spending and used a different card for non Tesco spending they would then have had 0% on the Tesco spending until March whilst enjoying the up to 56 days interest free period on the other card as long as they cleared any statement balance in full by the payment date.